Mental illness cases are often difficult to assess, and insurers may sometimes be too hasty in deciding on their validity. A recent determination by the Ombudsman for Long-term Insurance found that an insurer incorrectly declined a disability claim for mental illness because it failed to take a holistic approach, and disregarded the totality of the evidence.
According to the determination report, Ms A, an employee benefits consultant, suffered from migraines, anxiety, depression and cognitive problems. After making some serious mistakes in her work, her employer decided to terminate her employment in July 2022, but kept her on the payroll for a further three months, and continued to pay her group risk premiums. Ms A’s psychiatrist had her admitted for psychiatric care in August 2022, booking her off until January 2023.
Ms A claimed against her group disability income-protection cover in October 2022. The insurer, Fedgroup Life, rejected the claim on the grounds that the medical evidence “does not tender sufficient, objective medical information to support a disability as at the last day actively at work”, July 18, 2022.
The employer, which represented Ms A throughout, lodged a dispute. The insurer stated it would review the matter with comprehensive reports from an independent neuropsychologist, psychiatrist and occupational therapist.
Ms A was also diagnosed with breast cancer in October 2022, for which she submitted a critical illness claim. This claim was also rejected.
In the dispute, the insurer’s argument was twofold:
- The employee’s last day at work was July 18, 2022, so effectively she was not covered after that date.
- Ms A had shown no signs of mental illness before she lost her job: it was likely that her dismissal and subsequent breast cancer diagnosis had precipitated her mental condition.
But Ms A’s employer disputed this version, saying Ms A had a history of severe anxiety and depression, had consulted several health practitioners, and that her condition had directly affected her work performance.
When independent reports from a psychiatrist and occupational therapist were submitted to support the disability claim, the insurer was dismissive of them, saying the occupational therapist’s report “contains some inaccuracies and creates the impression that the therapist did not have access to, or did not consider, all relevant information”.
According to the report, the office of the ombudsman wrote to Fedgroup Life, raising evidence provided by Ms A’s employer relating to her work history and medical history prior to her termination date.
The insurer argued that, although collateral evidence from the employer should be considered, it was not objective. Furthermore, no performance management procedures had been instituted by the employer.
The case was discussed at a meeting of adjudicators, including the ombudsman, Judge Margaret Victor, and deputy ombudsman, Denise Gabriels.
Among other things, they agreed that, although Ms A had ceased working on July 18, 2022, she was on the payroll of her employer and still officially an employee until October 17, 2022, and therefore she had cover in place for both her disability and critical illness claims. They also considered the bundle of evidence showing that Ms A had suffered ongoing psychiatric problems that had adversely affected her work, which had been confirmed by subsequent reports. The adjudicators found that the occupational therapist’s report, contrary to the insurer’s view, was “a thorough, well-constructed report, based on a battery of neuropsychological and other tests”.
A provisional determination was issued to Fedgroup Life, stating that the critical illness claim had to be assessed and paid, if valid, and that the disability claim (a monthly income) had to be paid from the expiry of the waiting period until there were grounds for a termination of payments, if the patient recovered sufficiently to be fit for work.
It also referred to a recent High Court case, PWR v Discovery Life, covered in Personal Finance in April, where a stockbroker was awarded a R25 million payout on the grounds of medical evidence showing that his condition had been present for a lengthy period prior to diagnosis.
Fedgroup Life contested the provisional determination, restating both arguments: that Ms A was not covered after July 18, 2022, and that, even if cover was valid at the time Ms A submitted her claim, there was no objective medical evidence to support it.
The matter was again discussed by the adjudicators.They found that the insurer “had failed to engage with the extensive evidence” pointing to Ms A’s condition, and that she had been employed up until October 17, 2022, and thus covered by her group risk cover.
In their final determination, they ordered Fedgroup Life to abide by the provisional determination, which it did.